While the Student Aid and Fiscal Responsibility Act waits on the Senate's approval, collection agencies such as Coast Professional, Inc. - which recently opened a branch in Geneseo - aim to help the federal government collect receivables.
The bill, passed by the House of Representatives on Sept. 17, 2009, intends to make it easier for individuals to repay students loans by cutting interest rates, tying minimum payments to a graduate's income and family size and, in limited cases, allowing loan forgiveness.
Like several other initiatives, however, the bill may face an uphill battle in light of Scott Brown's Massachusetts Senate victory, which has acted as a roadblock for Democrat-sponsored legislation.
On a local level, Geneseo boasts one of the lowest default rates in the SUNY system. In 2008, of 896 graduates who went into repayment, just 16 defaulted on their loans. Individuals are considered to have defaulted if they have not made payments for more than eight months. Each year, about 3,000 students take out some type of debt, the most common being Perkins or Stafford loans.
The federal government issues Perkins loans; students who default on these loans are referred to the SUNY Student Loan Service Center in Albany. Private lenders, on the other hand, extend Stafford loans, and students who default on these will deal with the lender or a servicer of the lender, such as Sallie Mae.
Coast Professional - who opened their Geneseo branch on Volunteer Road in October 2009 - is a servicer for federal agencies and universities, but not banks. In addition to its location in Geneseo, Coast Professional operates out of Monroe, La. and Anaheim, Calif. Jon Prince, a senior manager, explained that the company "gets contracted out by federal agencies and universities to collect loans."
The owners of the company said they decided to open a location in Geneseo because they had previously owned a collection agency in Wyoming County and found that Western New York offered a promising selection of experienced workers. Prince said that there are many collection agencies in the area and therefore more potential employees with industry-specific backgrounds. He said that Geneseo was chosen specifically because the community welcomed the business.
"We are very pleased that Coast Professional has chosen Geneseo for their newest location," said Geneseo town supervisor William Wadsworth at a December ribbon-cutting ceremony. "Coast has added to our tax base and will provide nearly 100 good jobs as they grow. The Coast people are professional, honest and a delight to work with."
Though the branch is situated in a college town, it will work with colleges and universities across the country and will in no way target Geneseo alumni specifically. Universities and federal agencies hire companies like Coast Professional once students default on their loans as a way of outsourcing the effort associated with tracking down and procuring delinquent debts.
Prince said that students typically default on their loans either because they change their address and do not have their mail forwarded, or because they simply cannot make the payments.